Monday, 30 September 2013

The folly of import prohibition


Countries ban importation of certain items mostly to protect their local industries but in Nigeria, the resultant effect is more often than not, the opposite of that intended by government.
I have taken time to study our country’s import prohibition list as published on the website of the Nigeria Customs Service. I think it will easily qualify as the world’s longest prohibition list. In all, there are 24 headings under the list. They include:
1. Live or dead Birds including frozen
2. Pork, beef
3. Birds eggs
4. Refined vegetable oils and fats (but excluding linseed, castor and olive oils. Crude vegetable oil are however not banned from importation)
5. Cocoa butter, powder and cakes
6. Spaghetti/Noodles
7. Fruit juice in retail packs
8. Waters, including mineral waters and aerated waters containing added sugar or sweetening matter or flavoured, ice snow (but excluding energy or health drinks, liquid dietary supplements e.g. Power Horse, Red Ginseng etc) and beer and stout (bottled, canned or otherwise packed)
9. Bagged cement
10. Medicaments falling as indicated below:
• Paracetamol tablets and syrups
• Cotrimoxazole tablets syrups
• Metronidazole tablets and syrups
• Chloroquine tablets and syrups
• Haematinic formulations
• Ferrous sulphate and ferrous gluconate tablets
• Folic acid tablets
• Vitamine B complex tablet (except modified released formulations)
• Multivitamin tablets, capsules and syrups (except special formulations)
• Aspirin tablets (except modified released formulation and soluble aspirin)
• Magnesium trisilicate tablets and suspensions
• Piperazine tablets and syrups
• Levamisole tablets and syrups
• Clotrimazole cream
• Ointments – Penecilin/Gentamycin
• Pyrantel pamoate tablets and syrups
• Intravenous fluids (dextrose, normal saline etc)
11. Waste pharmaceuticals
12. Soaps and detergents in retail packs
13. Mosquito repellant coils
14. Sanitary wares of plastics (but excluding baby feeding bottles) and flushing ceinstern and waterless toos toilets.
15. Rethreaded and used pneumatic tyres but excluding used trucks tyres for rethreading of sized 11.00 x 20 and above
16. Corrugated paper and paper boards and cartons, boxes and cases made from corrugated paper and paper boards, toilet paper, cleaning or facial tissue excluding baby diapers and incontinent pads for adult use and exercise books
17. Telephone recharge cards and vouchers
18. Textile fabrics of all types and articles thereof and yarn including African print (printed fabrics) e.g. Nigeria wax, Hollandaise, English wax, Ankara and similar fabrics
Carpets and Rugs of all types; but excluding lace fabrics, georges and other embroided fabrics; made-up garments and other textile articles.
19. All types of foot wears and bags including suitcases of leather and plastics (but excluding safety shoes used in oil industries, hospitals, fire fighting and factories, sports shoes, canvass shoes all Completely Knocked Down (CKD) blanks and parts)
20. Hollow glass bottles of a capacity exceeding 150mls (0.15 litres) of a kind used for packaging of beverages by breweries and other beverage and drink companies
21. Used compressors, Used air conditioners and used fridges/freezers
22. Used motor vehicles above fifteen (15) years from the year of manufacture
23. Furniture but excluding baby walkers, laboratory cabinets such as microscope table, fume cupboards, laboratory benches, stadium chairs, height adjustment device, base sledge, seat frames and control mechanism, arm guide and head guides, skeletal parts of furniture such as blanks, unholstered or unfinished part of metal, plastics, veneer, chair shell etc, motor vehicle seats and seats other than garden seats or camping equipment, convertible into beds
24. Ball point pens.


The ban placed on a good number of the items listed above have much more serious side effects on the economy than government may be willing to admit.
Except for a few, most of the listed items have insufficient local substitutes. The ban on importation of textiles for instance is ill-advised because all the textile mills in Nigeria have closed shop due to the high cost of production. It is impossible for our textile mills, with the erratic power supply and poor state of infrastructure in the country, to manufacture products that will compete with the cheap Chinese imports that flood our markets.
The consumption of textile materials is very high and since local production is insufficient, smuggling is bound to thrive. When there is a huge demand and when the supply line is cut off, people will naturally look for other avenues/options available to them. This is what has led to importing these goods through unofficial channels. We all know what impact these unofficial channels have on the official economy.
The point I try to make here is that if there is sufficient local substitute for an item, then it will make a lot of sense to prohibit its importation but where there is an obvious gap in local production, banning such item will only fuel smuggling. With the porous nature of our borders, it is important to ensure that local substitutes are also able to compete in terms of price and quality with imported ones before a ban is put in place otherwise, the cheaper imports will soon find their way in and send the local manufacturers packing.

We see all these banned items everywhere; at the supermarkets, at local shops, by the roadsides; name it. The items are smuggled in and government is unable to charge import duties on them because they are banned. It is double loss to the economy.
Government’s new stance on rice importation, for instance, is ill-advised with the imposition of 110 per cent Customs duty. There is a huge gap between consumption and local production. According to government statistics, yearly consumption of rice is about 5.5 million metric tonnes with local production accounting for about 1.8 million metric tonnes, thus necessitating the need for importation to bridge the gap. Unfortunately, because of the excessively high import duty imposed at the beginning of this year, more than half of these imports are smuggled into the country.
An analysis of the vessels coming into the country at the Lagos Port Complex, Apapa revealed that since the beginning of this year, only one rice vessel has discharged at the port whereas more than 10 vessels were discharged monthly prior to the 110 per cent import duty policy. And there has not been scarcity of imported rice in the market simply because Customs operatives are incapable of stopping the commodity from being smuggled into Nigeria. Shipping lines simply discharge the commodity at Cotonou port and allow smugglers ferry it, in small quantities, into Nigeria.
What government has done with this long prohibition list, and other import policies that were not properly thought out before they were slammed on the economy, therefore, is promote smuggling with its attendant consequences.
It is not too late take another look at the list and other smuggler-friendly policies. 

No comments:

Post a Comment